Zaz in Limbo

Summary of Zaz in Limbo

by Puck | Audacy

21m•August 4, 2026
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Overview of Zaz in Limbo

In this episode of The Powers That Be, Peter Hamby and Bill Cohan focus on the stalled Paramount-Warner Bros. merger and how the delay leaves David Zaslav in a holding pattern at Warner Bros. Discovery. They also dig into the overheated IPO market, using the SpaceX offering as a case study for how underwriters, institutional investors, and retail buyers benefit or lose under the current system. The conversation connects media consolidation, antitrust risk, shareholder incentives, and the broader question of whether Wall Street’s IPO machinery can be reformed.

Paramount-Warner Bros. Merger: Why Zaslav Is Stuck

  • The merger is frozen by an antitrust lawsuit led by Democratic state attorneys general, including California’s Rob Bonta.
  • The deal’s timeline has stretched dramatically, with closing now potentially delayed until the earlier of:
    • resolution of the antitrust case, which could drag through appeals, even to the Supreme Court, or
    • June 2027
  • During this period, Zaslav is constrained by merger agreement covenants and cannot freely run Warner Bros. Discovery like an independent strategic actor.

What Zaslav Can and Can’t Do

  • He can continue normal-course operations.
  • He can likely greenlight movies and HBO series in the ordinary course.
  • He can pay down and refinance debt, with some wiggle room built into the agreement.
  • But he cannot make major strategic moves without consulting the Ellisons / Paramount side.
  • Large actions such as:
    • major hiring or firing decisions,
    • executive compensation changes,
    • joint ventures,
    • other substantial strategic shifts
      would likely require permission.

The Ellisons’ Role and the “Strategic Sidelines”

  • Cohan describes Zaslav as effectively needing to ask the Ellisons’ permission before making meaningful moves.
  • The episode suggests the Ellisons may be positioned to become the real decision-makers if the deal closes.
  • For now, Warner Bros. Discovery is stuck in a kind of corporate limbo:
    • too important to ignore,
    • too constrained to act boldly,
    • and in an industry changing too quickly to sit still for long.

The Ticking Fee and Why It Matters

  • Cohan highlights the deal’s ticking fee, which increases the purchase price over time.
  • If the merger takes another three quarters to close, WBD shareholders would receive an additional 75 cents per share.
  • That would bring the total value to about $31.75 per share.
  • The episode frames this as a smart piece of M&A negotiation by Zaslav and his advisers.

Market Read on the Deal

  • WBD stock is trading around $26, far below the implied deal value.
  • That discount suggests the market is skeptical the merger will actually close.
  • If the deal falls apart, WBD stock could drop sharply; Cohan notes one analyst has suggested it could fall to around $10.

What Happens If the Deal Fails?

  • Hamby raises the point that few people have clearly articulated what Warner Bros. Discovery’s future looks like without a transaction.
  • Cohan argues that the merger, despite its risks, could be a boon for Hollywood:
    • more film production,
    • more opportunity for writers, producers, and crews,
    • potentially more stability in a struggling media landscape.
  • He points out that the Ellisons have talked about making 30 films a year, which would be a significant output for the industry.

Possible Fallout or Next Moves

If the merger collapses, Cohan thinks the next move would likely be a return to Zaslav’s earlier plan to split Warner Bros. Discovery in two:

  • Gunnar would likely take the cable networks and CNN.
  • Zaslav would keep studios and streaming.

From there, other possibilities could reopen:

  • a renewed bid from Netflix,
  • a combination with NBCUniversal,
  • or other industry consolidation.

He also notes a growing wildcard: AI-generated filmmaking, which could become a serious competitive threat to traditional studios.

The IPO Market: A “Cash Carnival”

The second half of the episode shifts to Wall Street’s IPO machine, which Cohan criticizes as overly lucrative for bankers and underwriters and too favorable to insiders.

SpaceX as the Example

  • The SpaceX IPO reportedly raised $86 billion and valued the company at around $1.8 trillion.
  • 23 underwriters split $555 million in fees.
  • Goldman Sachs and Morgan Stanley each reportedly earned about $111 million.

Who Benefits?

Cohan’s core criticism:

  • Underwriters make huge fees with limited risk.
  • Institutional investors often get favorable access at the IPO price.
  • Retail investors frequently end up overpaying once shares start trading.

He points to the stock’s post-IPO volatility as evidence that everyday buyers get left holding the bag.

The Dutch Auction Idea for IPO Reform

  • Cohan discusses an older reform idea: the Dutch auction IPO, used by Google.
  • In this model, the market helps determine the IPO price rather than bankers setting it.
  • This approach was championed by Bill Hambrecht and is designed to make pricing more fair and transparent.

Why It Hasn’t Caught On

  • The current IPO system is controlled by powerful underwriters who have no incentive to change it.
  • As long as they can make huge fees quickly, they are unlikely to support reforms that reduce their power or compensation.

Paul Atkins and the SEC

  • The episode is skeptical that SEC Chair Paul Atkins will push meaningful IPO reform.
  • Cohan says Atkins appears more interested in:
    • making IPOs easier,
    • reducing disclosure requirements,
    • and helping companies raise capital with fewer reporting burdens.
  • But that does not address the core problem: the structure of IPO pricing itself.

Key Takeaways

  • Zaslav is trapped: Warner Bros. Discovery is functionally frozen until the merger dispute is resolved.
  • The ticking fee is valuable: delays may increase the eventual payout for WBD holders.
  • The market doubts the deal: the stock’s discount suggests skepticism about closing.
  • The IPO system is skewed: underwriters and insiders benefit far more than retail investors.
  • Real reform is unlikely: neither the SEC nor the current political environment seems poised to overhaul how IPOs work.

Notable Insight

“He basically has to ask permission from the Ellisons to do anything of substance.”

That line captures the episode’s central image of Zaslav: a media CEO with a big strategic prize in sight, but little freedom to act while the deal remains in limbo.